Proactive Medical Accounts Receivable Monitoring

Forewarned is Forearmed

Dr. David E. Marcinko MBA CMP™

By Dr. Gary L. Bode; MSA, CPA, CMP™

All hospitals, medical clinics, healthcare entities, and doctors are aware that accounts receivable (ARs) represent money that is owed to them, usually by a patient, insurance company, health maintenance organization (HMO), Medicare, Medicaid, or other third party payor. In the reimbursement climate that exists today, it is not unusual for ARs to represent 75% of a hospital’s investments in current assets. And, a medical practice may have ARs in the range of several hundred thousand dollars. ARs are a major source of cash flow, and cash flow is the life-blood of any healthcare entity. It pays bills, meets office payroll, and satisfies operational obligations.

Avoidance Management

The best way to manage AR problems is to avoid them in the first place by implementing a good system of AR control. Answering the following questions may help upgrade a system of AR control:

  • Is an AR policy in place for the collection of self-pay accounts (de minimus and maximus amounts, annual percentage rate (APR), terms, penalties, etc.)?
  • Do employees receive proper AR, bad debt, and follow-up training within legal guidelines?
  • Are AR exceptions approved by the doctor, office manager, or accounting department, or require individual scrutiny?
  • Are AR policies in place for dealing with hardship cases, pro bono work, co-pay waivers, discounts, or no-charges?
  • Are collection procedures within legal guidelines?
  • Are AR policies in place for dealing with past due notices, telephone calls, dunning messages, collection agencies, small claims court, and other collection methods?
  • Are guidelines in place for handling hospital, clinic, or medical practice consultations, unpaid claims, refilling of claims, and appealing claims?
  • Are office AR policies periodically revised and reviewed, with employee input?
  • Does the doctor, hospital, or clinic agree with and support the guidelines?


It is  typical that poor control occurs because the doctor and/or hospital is too busy treating patients, or the front office or administrative staff does not have, or follow a good system of AR control.



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2 Responses

  1. Thank you very much for this information.
    As a medical practice manager, this site and post is good for sharing.

    Kay I. Poyun


  2. Medical Organizations Protest CMS PECOS Policy

    Fifty-six medical organizations have signed onto a letter protesting a new CMS policy that, starting Jan. 4, 2010, will not pay claims for services when the referring physician is not in its enrollment database.

    According to the Medical Group Management Association, recent Medicare claims have been marked for non-payment if the healthcare provider had enrolled in Medicare before the database, known as the Provider Enrollment, Chain and Ownership System or PECOS, was developed. The letter stated that this affects as many as 200,000 of the more than 793,000 physicians and other healthcare providers enrolled in Medicare.

    Source: Andis Robeznieks, Modern Healthcare [11/10/09]


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